Dismantling of Didi’s prospectus: electric vehicles + autonomous driving have become the core business in 19 years and have achieved large-scale profits

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Didi Chuxing officially sprints for IPO listing.

On June 11, Didi officially submitted an IPO prospectus to the SEC, starting the listing process of US stocks, with the code DIDI. Goldman Sachs, Morgan Stanley, JPMorgan Chase, and China Renaissance are all underwriters.

Accompanying the IPO and prospectus, a series of key business, financial and equity data are fully disclosed for the first time.

Among them, as the only autonomous driving in the global travel platform, Didi autonomous driving is also regarded by Didi as one of its core competitiveness in the future. It is one of Didi’s current four core strategic sectors, and will also use 30% of the funds raised in the listing. Funding is used for directions related to autonomous driving.

The valuation of Didi’s autonomous driving company was also disclosed for the first time.

According to the prospectus, after the $525 million Series A financing jointly invested by parent company Didi and SoftBank Vision, Didi’s autonomous driving valuation reached $3.4 billion, and Didi’s share in the autonomous driving subsidiary is still as high as 70.4%— -Have absolute control.


What did Didi’s prospectus say?

The first is business ecology.

That is, what kind of business does Didi have?

According to the prospectus, as of March 2021, Didi operates in more than 4,000 cities and towns in 15 countries, including China, providing online car-hailing, taxis, ride-hailing, shared bicycles, shared motorcycles, chauffeurs, etc. Services such as car clothing, freight, finance and autonomous driving.

These diverse and widely implemented businesses are classified by Didi into “four core strategic sectors”, “three major businesses” and “double flywheels”.

1. Four core strategic sections:

They are shared travel platforms, car service networks, electric vehicles and autonomous driving.

2. Three major businesses:

Represents Didi’s revenue structure, including China’s travel business (China’s online car-hailing, taxi, chauffeured and ride-hailing services), international business (international travel and food delivery, etc.) and other businesses (bike sharing and motorcycles) , car clothing, freight, autonomous driving and financial services).

3. Double flywheel:

Referring to the business model, as the overall shared mobility market continues to grow, Didi’s shared mobility, vehicle clothing and electric vehicle network creates a double flywheel effect that benefits drivers, passengers and the platform.

So under these major models, how does Didi’s business data perform?


Let’s look at the finances first:

In terms of order volume and transaction value, in the 12 months ended March 31, 2021, Didi’s global average daily transaction volume was 41 million orders, and the total transaction volume of the entire platform was 341 billion yuan.

During the three-year period from January 1, 2018 to March 31, 2021, the total income of platform drivers is about 600 billion yuan.

The prospectus also announced the revenue of Didi’s specific business. In 2020, Didi’s three major businesses – China’s travel business, international business and other business revenue are 133.6 billion yuan, 2.3 billion yuan and 5.8 billion yuan respectively.

China is undoubtedly the absolute home of Didi’s business and revenue. Didi also disclosed that 93.4% of its platform revenue in 2020 and the first quarter of 2021 came from China and 6.6% from international.


China’s mobility business achieved adjusted EBIT of RMB 3.84 billion in 2019, RMB 3.96 billion in 2020, and RMB 3.62 billion in the first quarter of 2021. In addition, in 2020, the profit margin before interest, tax and amortization of China’s online car-hailing business was 3.1%.

In other words, Didi has achieved large-scale profitability since 2019.


Number of users:

As of March 31, 2021, Didi has 493 million global annual active users and 15 million global annual active* drivers.

Among them, from March 31, 2020 to March 31, 2021, Didi had 377 million active users and 13 million active drivers in China.

In the first quarter of 2021, Didi China Travel had 156 million monthly active users, and the average daily transaction volume of China’s travel business was 25 million.

Finally, in terms of fundraising purposes:

One is scale expansion. Didi disclosed in its prospectus that it plans to use about 30% of the proceeds to expand its business in international markets outside of China.

The second is to invest in the future. About 30% of the funds raised are used to enhance technological capabilities including shared mobility, electric vehicles and autonomous driving.

The third is user demand satisfaction and experience. About 20% is used to launch new products and expand existing product categories to continuously improve user experience.

The remainder may be used for working capital needs and potential strategic investments, among others.


How does Didi introduce autonomous driving in its prospectus?

At present, Didi is the only company in the global travel platform that is still developing autonomous driving.

Therefore, in the prospectus, in addition to confirming the strategic position of Didi’s autonomous driving, one of the four core strategic sectors of Didi. Didi also disclosed more details about its self-driving business.

At the core is the initial disclosure of the valuation.

Didi announced that it participated in the A round of financing after the spin-off of Didi Autonomous Driving. In this round of financing, SoftBank and Didi jointly invested US$525 million in Didi Autonomous Driving, which is the largest single financing obtained by a domestic autonomous driving company.

The prospectus data also shows that after the completion of the A round of financing, Didi’s autonomous driving valuation has reached 3.4 billion US dollars.

However, beyond the scope of the prospectus disclosure, Didi Autopilot recently completed a new round of financing including IDG, GAC, etc.

The current valuation of Didi’s autonomous driving company is said to have exceeded $5 billion.

In terms of the size of startups, Didi Autonomous Driving is currently one of the most valuable companies in China.

In terms of R&D and team size:

The prospectus shows that Didi has 7,000 R&D personnel, accounting for 45% of the total. In 2018, 2019 and 2020, the R&D expenditures were 4.4 billion yuan, 5.3 billion yuan and 6.3 billion yuan respectively. 1.9 billion yuan.

Among them, the self-driving subsidiary, as of the first quarter of 2021, has a self-driving team of more than 500 people and a fleet of more than 100 self-driving cars.

At present, the main test and trial operation focus of Didi’s autonomous driving is located in Jiading, Shanghai.

Didi said that the company has a total of 530 kilometers of roads in Shanghai that can be tested. Didi Autopilot has also established a safety command center for real-time monitoring of vehicles and road conditions, enhancing remote assistance capabilities to cope with larger-scale autonomous fleet operations in the future. .

Key vehicle-to-everything or V2X hardware is also deployed at key intersections within the test area to facilitate coordination between fleets and minimize safety blind spots.

In addition, Didi’s autonomous driving is also conducting road tests in Beijing and California.

It is worth noting that in the prospectus, Didi also further emphasized why it should insist on developing autonomous driving?

Didi has been deploying autonomous driving since 2016. In Didi’s view, autonomous driving is the key to future mobility. The shared mobility network is the key to making autonomous driving a reality.

Autonomous driving can significantly improve safety by significantly reducing the probability of traffic accidents. Currently, there are about 43.2 million traffic accidents in the world each year, and this figure is 8.6 million in China. Of these, more than 90% are human errors.

Autonomous driving technology can significantly improve safety by reducing the probability of traffic accidents.

In addition to the efficiency dimension, autonomous driving can also allow cars to run all day, thereby improving vehicle utilization, reducing vehicle operating costs, and further reducing travel costs.

Based on the scale effect and high vehicle utilization rate of the shared travel mobile network, Didi has also become the best platform for the commercialization of autonomous driving technology.

Didi also emphasized that advancing autonomous driving does not mean that drivers will be replaced.

In Didi’s view, self-driving technology will support drivers to meet significant growth in future demand. In addition, the growth of self-driving cars will also create more jobs.

Therefore, it is also out of the determination of autonomous driving. At present, the co-founder and CEO of the parent company Zhang Bo is leading the team to promote autonomous driving.


Other highlights of Didi’s prospectus?

Mainly the shareholder structure.

The largest individual shareholder is the orange-green combination.

According to the prospectus, Didi founder and CEO Cheng maintains 7% of the shares, while co-founder and president Liu Qing holds 1.7%.

However, it is worth noting that according to the design of different rights for the same shares, Cheng Wei Liuqing has a total of more than 48% of the voting rights, and Didi management, including Cheng Wei Liuqing, has more than 50% of the voting rights.

This means that Didi’s control is firmly in the hands of the core management.


Among institutional investors, the most prominent ones are SoftBank Vision and Tencent.

SoftBank Vision holds 21.5% of the shares and Tencent holds 6.8%. Among them, SoftBank has made it clear that after Didi goes public, relevant personnel will withdraw from Didi’s board of directors-whether it means that all cash out after the listing is unknown.

Interestingly, Uber owns 12.8% of the shares—mainly the financial stake in exchange for the sale of Uber’s China business to Didi.

This also indicates that Uber will usher in an additional important financial return after Didi goes public.

For Uber, which is now under the dual pressure of large-scale expansion and the epidemic, it will bring a beautiful financial report.

Fate, amazing.

At the beginning, the fight was difficult. At one time, Uber started to negotiate and talk with Didi based on its strength.

Now, Didi has staged a show of reciprocation, giving help in the snow.

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